The U.S. Department of Justice (DOJ), through the Drug Enforcement Administration (DEA), issued a final order partially rescheduling marijuana under federal law, effective April 22, 2026. While many headlines are framing this as “marijuana being moved to Schedule III,” the reality is more precise and limited—and reflects a phased approach closely tied to last year’s presidential Executive Order (EO).
In relevant part, the DOJ’s final order moves two specific categories of marijuana-related substances from Schedule I to Schedule III under the Controlled Substances Act (CSA):
- FDA‑approved drug products that contain marijuana or plant‑derived THC, and
- Marijuana that is produced, distributed, or dispensed under a qualifying state medical marijuana license (collectively “medical marijuana”)
At the same time, the DOJ stressed that unlicensed marijuana, recreational marijuana, synthetic THC, and non‑FDA‑approved products remain fully illegal under federal law.
The Drug Enforcement Administration (DEA) and CSA requirements applicable to Schedule III controlled substances would apply, in many instances, for the first time, to medical marijuana. These requirements may include registration, recordkeeping, security measures, suspicious order monitoring and reporting, and federal inspections.
This action follows President Trump’s December 2025 EO, which directed DOJ to complete the marijuana rescheduling process after it stalled during the prior administration amid litigation and administrative disputes. According to the DOJ Press Release accompanying the final order, this represents an effort to bring consistency, oversight, and legal clarity to an area long characterized by conflict between federal law and state medical cannabis programs.
This decision marks the first time the federal government has formally acknowledged, as a matter of law, that marijuana has accepted medical use and poses a lower relative risk than Schedule I substances. As a result, we anticipate some companies seeking DEA registration for FDA‑approved marijuana‑based medicines, along with increased investment in clinical research and product development.
Phased Implementation and Future Proceedings
The DOJ has characterized rescheduling as a phased process where FDA‑approved products and state‑licensed medical marijuana would move immediately to Schedule III. At the same time, the DOJ has announced an expedited administrative hearing process beginning June 29, 2026. Of note, the DEA appears to have rescinded the Biden Administration’s August 29, 2024, notice of hearing, thereby terminating those 2-year-long prior proceedings and initiating new ones subject to firm, accelerated deadlines. These proceedings will evaluate whether broader rescheduling—including the potential inclusion of adult‑use recreational marijuana—is legally appropriate.
Simultaneously, DOJ has continued to make clear that this action does not federally legalize marijuana, does not disturb state recreational marijuana prohibitions, and does not diminish DEA enforcement authority over non‑qualifying cannabis activity.
Tax and Business Implications
Another consequential effect of the Schedule III change relates to federal taxation. Because Internal Revenue Code Section 280E applies only to Schedule I and II substances, qualifying state‑licensed medical marijuana businesses will no longer automatically be barred from deducting ordinary business expenses.
DOJ further also indicated that Treasury should consider retroactive tax relief for prior years in which businesses operated under state medical marijuana licenses — though implementation of any retroactive relief remains uncertain and will require further guidance.
Going Forward
In short, this action represents a targeted federal realignment—not broad legalization. It reflects a deliberate attempt to reconcile federal drug policy with modern medical practice, international treaty obligations, and long‑standing state medical marijuana programs. We will continue to monitor developments and provide updates.
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